Brazil Area’s Cane Crop Seen Up to 65 Million Tons Higher

By Isis Almeida -
Oct 18, 2012

The sugar-cane crop in Brazil’s
center south, the main growing region of the world’s biggest
producer, may climb 60 million to 65 million metric tons in the
season that starts there in April, according to Kingsman SA.

The crop in the current season will be 512 million tons,
the Lausanne, Switzerland-based researcher estimates. Rains are
helping plantings for 2013-14, founder Jonathan Kingsman said
today in an interview at the company’s event during London Sugar
Week. Kingsman’s last forecast for the next crop was 538 million
tons, and the company will revise the figure next week to take
into account a new crop survey.

“The recent rains have helped plantings, have helped the
crop for next year,” said Kingsman, a former Cargill Inc.
employee who has worked in sugar for more than three decades.
“I wouldn’t be surprised if it was 575 million tons.”

Millers in Brazil are likely to increase ethanol output
next year because of rising consumption and limited capacity to
make sugar, Kingsman said. Demand for Brazilian anhydrous
ethanol, used to blend into gasoline, will rise by 2.5 billion
to 3 billion liters (660 million to 792 million gallons), he
said. Brazil’s ethanol exports to the U.S. will expand by 1.3
billion to 1.5 billion liters, Kingsman estimates.

“What you will see next year is more demand for
anhydrous,” he said. “This is coming from two fronts. First of
all, the move to 25 percent from 20 percent on the domestic
blend in Brazil and the other one is the renewable fuels mandate
from the U.S.”

Ethanol Demand

The Brazilian government is considering raising the
mandatory amount of ethanol blended into gasoline back to 25
percent. Brazil cut the ethanol blend to 20 percent last October
after prices of the renewable fuel rose following a poor cane
harvest.

An increase in demand for anhydrous ethanol is more likely
to affect supplies of the hydrous variety, used in flex-fuel
cars, than that of sugar, according to Kingsman. Brazil is more
likely to de-hydrate hydrous ethanol to make it into anhydrous
than to take supplies away from sugar, he said.

“Sugar at the moment pays more, so they will be maximizing
sugar,” Kingsman said. “Next year, on the forward curve, it’s
still sugar that pays the most.”

Raw sugar traded in New York has declined 15 percent this
year to 19.81 cents a pound as supplies are set to outpace
consumption for a third year. Sugar prices need to fall below
16-17 cents a pound before millers in Brazil favor ethanol at
the expense of the sweetener.

“If we go down below that level, we lose 6 million to 7
million tons of sugar, which would mean that the world is
balanced, there is no surplus, so producers don’t feel any need
to sell under 19 cents a pound,” Kingsman said.